The World Is Flat, and Chocolatiers Want to Coat It
NY Times: Swiss chocolatiers, having long ago conquered markets in Europe and North America, are now aiming at the vast expanses of Russia, India and China, making Swiss chocolate a case study in globalization.
Reminder: Trade works both ways. As economies like India, Russia, China, and Brazil become wealthy and prosperous by producing goods and services for the U.S. and European markets, the workers of those economies also become increasingly wealthy and prosperous consumers of American and European products.
Exhibit A: Swiss chocolate.
WASHINGTON – The Supreme Court on Monday (December 10) said judges may impose shorter prison terms for crack cocaine crimes, enhancing judicial discretion to reduce the disparity between sentences for crack and cocaine powder.
WASHINGTON – The U.S. Sentencing Commission voted unanimously Tuesday (December 11) to allow some 19,500 federal prison inmates, most of them black, to seek reductions in their crack cocaine sentences.
Four of every five crack defendants is black. Most powder cocaine convictions involve whites.
Even after the change, prison terms for crack cocaine still are two to five times longer on average than sentences for powder cocaine, the result of a 20-year-old decision by Congress to treat crack more harshly.
See previous CD posts here and here. Note that crack cocaine is powdered cocaine + baking soda.
From the Minneapolis Fed’s interview with University of Chicago economist Eugene Fama (pictured above):
Fama’s work transformed Wall Street, and later Main Street, by giving rise to a proliferation of low-cost index funds, as many questioned the value of paying for active portfolio management. “If one takes into account the higher initial loading charges of the mutual funds,” he observed over 40 years ago, “the random investment policy outperforms the funds.”
Mpls. Fed: How do you view the suggestion that some CEOs are overcompensated?
Fama: If it’s a market wage, it’s a market wage. They may be big numbers; that’s not saying they’re too high. It’s easy to say that people are paid too much, but when you’re on the other side of the fence trying to hire high-level corporate managers, it turns out not to be so easy.
Mpls. Fed: I understand that you work every day, even holidays. Is that right?
Mpls. Fed: That’s an amazing work ethic.
Fama: Not really.
(HT: Marginal Revolution)
“Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.”
~Milton Friedman in his book “Monetary History of the United States 1867-1960,” (co-authored with Anna Schwartz)
Exhibit A: See chart above, click to enlarge. Monthly data for CPI and M1 are from the St. Louis Federal Reserve.
Challenge: If taxes increases for “the rich” are a good thing, members of Congress and presidential candidates (all part of either “the rich” or “super-rich”) don’t have wait for the Bush tax cuts to expire or for Congress to pass new tax legislation, they can immediately raise taxes on themselves voluntarily by making a gift to the U.S. Treasury.
Here is the link to the Treasury’s website with instructions for politicians, presidential candidates, or any citizen like Warren Buffet who wish to make a general donation to the U.S. government into an official account called “Gifts to the United States.”
Question: What if Edwards or Clinton proposed legislation to force everybody to “donate” 5 pints of blood every year. Wouldn’t it be a lot more credible if they were already donating blood themselves right now voluntarily, and not waiting until they were forced to “donate” blood by their own legislation?
This is from a previous CD post, and I mentioned on Larry Kudlow’s radio program today that I would re-post instructions on how politicians and Warren Buffet can pay extra taxes to the U.S. Treasury.
Update: I’ll be appearing on Larry Kudlow’s radio program this morning (Saturday), you can listen live here at WABC, should be between 10:30 a.m. and 11 a.m. EST.
The graph above shows that the M1 money supply has been flat for three years, and is actually lower now than it was a year ago, suggesting that Fed policy has been TOO TIGHT.
See previous post where I suggested that the Fed Funds rate should be about 3-3.25%.
Tune in to CNBC’s “Kudlow and Company” on Monday night (7 p.m. EST) for an economic smackdown between Robert Reich, former labor secretary under Clinton, and free-market Austrian economist Mark Skousen, on the question, “What drives the economy–consumer spending or business investment?” It should be an interesting debate between a demand-side Keynesian and a supply-side Austrian.
The graph above shows that retail sales is not a leading indicator of the economy, does not predict recessions (shaded areas) and is probably one of the most stable and boring economic variables. Notice in the graph above that retail sales almost never decline, even during recessions (shaded areas). Industrial production, on the other hand, is an excellent indicator of the business cycle. Notice the significant decline in industrial output in each of the last four recessions.
Conclusion: According to Skousen, “Productivity and investment are driving forces in the economy; consumer spending is the effect, not the cause, of prosperity. Say’s law (supply creates demand) trumps Keynes’s law (demand creates supply)!”
For more information check out Mark Skousen’s book “The Structure of Production.”